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Dish Networks founder Charles Ergen and his “helpers” used “the type of non-denial denials that the White House offered when confronted by the Watergate break-in” to mask the Dish board of directors’ knowledge and acquiescence in a scheme to fraudulently acquire $1 billion in LightSquared senior debt claims, lawyers for LightSquared wrote in a post-trial brief filed Monday night with the bankruptcy court overseeing the company’s Chapter 11 proceedings.

Following a week of testimony this January from Ergen and LightSquared majority equity holder Philip Falcone, of Harbinger Capital Partners, among others, the two sides are preparing for closing arguments before U.S. Bankruptcy Judge Shelley Chapman on March 12. LightSquared accuses Ergen of orchestrating a year-long effort to secretly purchase the bankrupt company's debt, using shell companies to circumvent restrictions against such purchases by competitors, as part of a plot to acquire LightSquared's valuable wireless spectrum on the cheap. Ergen made similar controversial maneuvers in the bankruptcies of DBSD and TerreStar to amass 40 MHz of broadband spectrum, and he is attempting to do it again here, LightSquared argues.

LightSquared, as plaintiff in the suit, filed its post-trial brief Monday to meet a court-imposed deadline. Lawyers for the defendants – Dish, EchoStar Corp., Ergen and SP Special Opportunities, the special purpose vehicle Ergen used to carry out his LightSquared trades – will file their response in the coming days. During the trial, Ergen, the richest man in Colorado, testified that he spent more than $800 million to buy LightSquared’s debt because he liked it as a personal investment. Over the course of a year, Ergen paid between 48 and 96 cents on the dollar to buy LightSquared debt on the secondary market. Ergen created a special purpose vehicle, SP Special Opportunities, and used asset manager Sound Point Capital Management to make the purchases on its behalf. He did so, Ergen testified, in order to remain anonymous because he worried that revealing his identity drive up the price of the debt on the secondary market.

LightSquared has asked Chapman to either disallow Ergen’s claims altogether or to equitably subordinate them – putting them behind every other debtor in line for repayment – designate Ergen’s votes on LightSquared’s proposed reorganization plan, and to award damages “sufficient to compensate LightSquared for the harm suffered by reason of the defendants’ wrongdoing.” Chapman’s decision will help determine the fate of LightSquared’s latest proposed plan, which she is scheduled to consider in court less than a week after resolving this dispute, at a March 17 hearing.

During a hearing on LightSquared’s disclosure statement on Monday, lawyers for the company said their latest plan will repay SPSO in full, in spite of the pending lawsuit, through a third-lien seven-year paid-in-kind debt facility. SPSO's lawyers vehemently oppose the treatment, but LightSquared maintains it is a generous offer in light of SPSO’s “egregious misconduct.”

“SPSO is asked only to wait for full payment (for a shorter period than the new money lenders), while earning interest at a very high rate (higher than all other lenders) – indeed, a rate that Ergen testified he found attractive and at a cost by no means a windfall to LightSquared’s estates,” LightSquared wrote.

Ergen’s defense, that he bought the debt as a personal investment, is not credible because he paid close to par on many of the purchases, and LightSquared entered bankruptcy just days after SPSO’s first purchase, LightSquared lawyers said. Judge Chapman noted in court on Monday that SPSO paid as much as 96 cents on the dollar for LightSquared debt, even though e-mails Ergen wrote at the time indicate he believed the market value was closer to 70 cents on the dollar. An investment in LightSquared’s LP debt was only a play to be part of a reorganization, the most likely outcome of which would be equitization of the debt in whole or in part, LightSquared claims.

“The trail of breach and deceit defendants have left in their wake is unprecedented,” LightSquared went on. “The attempted deception, moreover, continued during the trial, where, among other things, Ergen and his helpers, [Dish Treasurer Jason] Kiser and [Sound Point founder Stephen] Ketchum, nonsensically sought to persuade the court that the $800 million in cash Ergen spent to buy the LP debt-described by Ergen as constituting almost all of his non-Dish, non-EchoStar assets-was a personal investment, so he could open a wireless broadband business in direct competition with DISH.”

“As a court of equity, this court should not permit defendants to evade the consequences of, let alone profit from, this type of behavior,” LightSquared said.